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2010 DIGILAW 484 (RAJ)

MOHAN DAS v. ADDL. DISTRICT JUDGE NO. 3, JODHPUR

2010-02-26

VINEET KOTHARI

body2010
( 1 ) THIS writ petition has been filed by the petitioner Mohan Das being aggrieved by the order dated 2-6-2007 passed by learned Additional District Judge, No. 3, jodhpur whereby the learned Court below dismissed the appeal of the present petitioner mohan Das against the interim award/order passed by the learned Arbitrator on 11-3-2007, as not maintainable under Section 37 of the Arbitration and Conciliation Act, 1996. ( 2 ) THE learned Arbitrator had passed an order/interim award on 11-3-2007 appointing Mr. Abdul Latif. Advocate as Receiver cum- Commissioner and directed the present petitioner to handover the possession of shop and account books to the said Receiver- cum- Commissioner in respect of the dispute arising between the parties from a partnership between them under a partnership-deed dated 29-10-1998. ( 3 ) THE learned counsel for the petitioner, ms. Rekha Borana submitted that the order dated 11-3-2007 passed by the learned Arbitrator was an 'interim order passed by him in the arbitration proceedings which were initiated by the respondent Smt. Jaya Vyas purportedly for rendition of accounts in the partnership dispute between the parties and the said order dated 11-3-2007 could not be said to be an 'interim award' and, therefore, she submitted that since the said order dated 11-3-2007 was only an 'interim order' passed by the learned Arbitrator in terms of Section 17 of the Arbitration and Conciliation Act, 1996, therefore, the same was appealable to the Court of learned District Judge under section 37 of the Act. She also urged that the powers of Court under Section 9 of the said Act to grant interim measures before or during arbitral proceedings or at any time after making the arbitral award as prescribed under Section 9 is akin to powers of learned arbitrator under Section 17 of the Act which provides for interim measures which can be ordered by the arbitral tribunal and, therefore, such interim order, if any passed by the arbitral tribunal is subject to appeal before the learned Court below and, therefore, the appeal could not have been dismissed as not maintainable by the impugned order dated 2-6-2007 by the learned Appellate Court below. ( 4 ) MS. ( 4 ) MS. Rekha Borana, learned counsel appearing for the petitioner also urged that though the appointment of arbitrator himself was illegal during the pendency of Section 8 Application in the suit for injunction filed by the present petitioner as it was really a case of tenancy given the cover of a partnership and, the present petitioner had also moved an application before the said learned Arbitrator under Section 12 of the Act pointing out his disqualification to act as an arbitrator since he was closely related to the claimant Smt. Jaya Vyas and, therefore, there was chance of bias and she further urged that there was no claim petition filed before the learned Arbitrator and, therefore, the arbitration proceedings in question were void and unsustainable, yet the learned arbitrator after a lapse of long period of 3 to 4 years suddenly passed the said order on 11-3-2007 appointing the Receiver -cum -Commissioner and the appeal against which has been rejected by the learned Court below on 2-6-2007. She, therefore, prayed that the present writ petition deserves to be allowed and holding the appeal to be maintainable under Section 37 of the Act, the matter deserves to be remanded back to the learned Additional district Judge No. 3, Jodhpur for decision afresh in accordance with law. ( 5 ) ON the other hand, Mr. M. C. Bhoot, learned counsel appearing for the respondents submitted that the impugned order dated 11-3-2007 passed by the learned Arbitrator is nothing but an 'interim award' and since no appeal lies against the interim or final award under Section 37 of the Act but the same can only be challenged on limited grounds as per Section 34 of the Act, therefore, the learned Court below was justified in dismissing the appeal filed by the present petitioner Mohandas as not maintainable. He submitted that on account of non-cooperation of the petitioner before the learned Arbitrator, the said order was passed ex parte on 11-3-2007 and since the partnership already stood dissolved, the learned Arbitrator was justified in appointing the Receiver- cum- Commissioner and directing the present petitioner Mohan Das to handover the possession of the shop in question and also the regular books of accounts of said partnership maintained by him. He submitted that the said order dated 11-3-2007 cannot be said to be an interim order under Section 17 of the Act and, therefore, no appeal could be filed against the same before the learned Court below. ( 6 ) IN rejoinder, Ms. Rekha Borana relying on the following judgments in support of her contentions urged that the order dated 11-3-2007 was an 'interim order' only and not an interim award. ( 7 ) IN case of Firm Ashok Traders and Anr. etc. v. Gurumukh Das Saluja and Ors. , 2004 (1) Raj 270 (SC): ( AIR 2004 SC 1433 ), the hon'ble Supreme Court in Para 18 held as under: "18. Under the A and C Act, 1996, unlike the predecessor Act of 1940, the arbitral tribunal is empowered by Section 17 of the Act to make orders amounting to interim measures. The need for Section 9, in spite of Section 17 having been enacted, is that Section 17 would operate only during the existence of the arbitral and its being functional. During that period, the power conferred on the arbitral tribunal under Section 17 and the power conferred by the Court under Section 9 may overlap to some extent but so far as the period pre and post the arbitral proceedings is concerned the party requiring an interim measure of protection shall have to approach only the Court. The party having succeeded in securing an interim measure of protection before arbitral proceedings cannot afford to sit and sleep over the relief, conveniently forgetting the 'proximately contemplated' or 'manifestly intended' arbitral proceedings itself. If arbitral proceedings are not commenced within a reasonable time of an order under Section 9, the relationship between the order under Section 9 and the arbitral proceedings would stand snapped and the relief allowed to the party shall cease to be an order made 'before', i. e. in contemplation of arbitral proceedings. The court approached by a party with an application under Section 9, is justified in asking the party and being told how and when the party approaching the Court purposes to commence the arbitral proceedings. Rather, the scheme in which Section 9 is placed obligations (sic!) the Court to do so. The Court may also while passing an order under Section 9 put the party on terms and may recall the order if the party commits breach of the terms. Rather, the scheme in which Section 9 is placed obligations (sic!) the Court to do so. The Court may also while passing an order under Section 9 put the party on terms and may recall the order if the party commits breach of the terms. " ( 8 ) IN case of M. D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd. , 2003 (3) Raj 447 (SC): ( AIR 2004 SC 1344 ), the Hon'ble Supreme Court has held as under : "60. A bare perusal of the aforementioned provisions would clearly show that even under Section 13 of the 1996 Act the power of the arbitrator is a limited one. It cannot issue any direction which would go beyond the reference or the arbitration agreement. Furthermore, an award of the arbitrator under the 1996 Act is not required to be made a rule of Court; the same is enforceable on its own force. Even under Section 17 of the 1996 act, an interim order must relate to the protection of subject matter of dispute and the order may be addressed only to a party to the arbitration. It cannot be addressed to other parties. Even under Section 17 of the 1996 act, no power is conferred upon the Arbitral tribunal to enforce its order nor does it provide for judicial enforcement thereof. The said interim order of the learned Arbitrator, therefore, being coram non judice was wholly without jurisdiction and, thus, a nullity. " ( 9 ) IN case of Anand Prakash and Anr. v. Assistant Registrar, Co-operative Societies and Ors. , AIR 1968 Allahabad 22, the allahabad High Court has held as under : "an arbitrator is not the repository of the judicial function of the State. He cannot be likened to a Court or a judge. Chapter XIV of the rules provides the arbitrator many of trappings of a Court. That does not give him the status of a Court. That has been done to prevent him from exercising of powers to decide the referred dispute arbitrarily. An analogy of an arbitrator with the Courts is neither apt nor appropriate. The Courts of general jurisdiction have been constituted for administering justice in the State. In respect of the legality of their acts, they have been placed on the same level as an ordinary citizen. An analogy of an arbitrator with the Courts is neither apt nor appropriate. The Courts of general jurisdiction have been constituted for administering justice in the State. In respect of the legality of their acts, they have been placed on the same level as an ordinary citizen. The Co-operative Societies Act and the rules have constituted the arbitrator for a limited purpose and have conferred well-defined powers. He has no general jurisdiction. No inherent powers which properly belong to courts can be recognized in his case. " ( 10 ) IN case of Liberty Shoes Limited v. Harish Kumar Gupta and Anr. , 2006 (4) Arb. LR 225 (P and H) : (AIR 2007 (DOC) 225), the Court has held as under : "by way of impugned order no rights of the parties to the matter in dispute have been decided. Section 31 (6) of the Act is clear that only those matters qua which the reference is made and part thereof is decided, the same can be said to be an interim award and no other order passed by the arbitrator can be said to be an interim award, which can be changed under Section 34 of the Act. Further held that the impugned order passed by the arbitrator can, by no stretch of imagination, be said to have been passed on a matter referred to it with respect of which the arbitrator can make a final arbitral award. The application moved by the petitioner was more or less in the nature of challenge to the jurisdiction of the arbitrator qua the petitioner and would, therefore, be prima facie covered under Section 16 of the Act. In case the said plea was accepted it was open to the respondents to file an appeal against the said order under Section 37 of the Act, whereas the rejection of the said application cannot be the subject-matter of appeal and the parties can only challenge the said decision when final award is made under Section 34 of the Act. Further held that the reading of the impugned order passed by the arbitrator shows that the arbitrator had rejected the application moved by the petitioner against deletion of its name by holding that it had the jurisdiction to proceed with the matter against the petitioner. Further held that the reading of the impugned order passed by the arbitrator shows that the arbitrator had rejected the application moved by the petitioner against deletion of its name by holding that it had the jurisdiction to proceed with the matter against the petitioner. The fact that the learned arbitrator has ordered the petitioner to file the written statement in detail if so advised, indicates that the learned arbitrator prima facie came to the conclusion that he had the jurisdiction to adjudicate upon the matter and, therefore, the order passed by the arbitrator is an interim order and not an interim award against which an application under Section 34 of the act could be maintainable. The impugned order cannot be said to be an order with respect to which a final arbitral award is to be passed so as to bring it within the definition of interim award. " ( 11 ) I have heard learned counsels at length and perused the records including the original record produced by the learned Arbitrator in pursuance of the directions of this court. ( 12 ) THE controversy in band is short, but interesting. The maintainability of appeal would depend upon the construction of the tenor of the order dated 11-3-2007 passed by the learned Arbitrator. The said order dated 11-3-2007 which is Annexure-3 on record itself gives the title 'interim order'. The nature of the order also indicates that by the said order, the learned arbitrator appointed the Receiver -cum -Commissioner and directed the respondent Mohandas, the present petitioner before this Court to handover the possession of shop and the books of accounts and articles etc. of the said partnership firm known as M/s. Anand Bakery, Jalap Mohalla, jodhpur to the said Receiver -cum -Commissioner and the said Receiver- cum- Commissioner was directed to make a report of the same within one month so that 'final award' could be passed. ( 13 ) THE term 'award' has been defined in section 2 (c) of the Act of 1996 which reads as under : "2 (c) "arbitral award" includes an interim award;" ( 14 ) SECTION 31 of the Act provides for form and contents of arbitral award. The said section 31 reads as under : "31. Form and contents of arbitral award. The said section 31 reads as under : "31. Form and contents of arbitral award. (1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. (2) For the purpose of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. (3) The arbitral award shall state the reasons upon which it is based, unless- (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under Section 30. (4) The arbitral award shall state its date and the place of arbitration as determined in accordance with Section 20 and the award shall be deemed to have been made at that place. (5) After the arbitral award is made, a signed copy shall be delivered to each party. (6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award. (7) (a) Unless otherwise agreed by the parties, where and insofar as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment. (8) Unless otherwise agreed by the parties, (a) the costs of an arbitration shall be fixed by the arbitral tribunal; (b) the arbitral tribunal shall specify (i) the party entitled to costs, (ii) the party who shall pay the costs, (iii) the amount of costs or method of determining that amount, and (iv) the manner in which the costs shall be paid. Explanation : For the purpose of Clause (a), "costs" means reasonable costs relating to (i) the fees and expenses of the arbitrators and witnesses, (ii) legal fees and expenses, (iii) any administration fees of the institution supervising the arbitration and (iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award. " ( 15 ) THE Black's Law Dictionary defines the term 'award' in the following manner: "award. n. A final judgment or decision, esp. one by an arbitrator by a jury assessing damages. Also termed arbitrament. Award, vb. To grant by formal processor by judicial decree the company awarded the contract to the low bidder the jury awarded punitive damages" ( 16 ) AS against the term award the Black's law Dictionary defines the term 'order' as under: "order, n. 1. A command, direction, or instruction. See MANDATE (1 ). 2. A written direction or command delivered by a Court or judge. *the word generally embraces final decrees as well as interlocutory directions or commands. Also termed Court order; judicial order. See MANDAMUS. (Cases : federal Civil Procedure - 928; Motions - 46. C. J. S. Motions and Orders 1 - 3, 13, 50, 59.)"an order is the mandate or determination of the Court upon some subsidiary or collateral matter arising in an action, not disposing of the merits, but adjudicating a preliminary point or directing some step in the proceedings. " 1 Henry Campbell Black, A treatise on the Law of Judgments 1, at 5 (2ded. 1902 ). "while an order may under some circumstances amount to a judgment, they must be distinguished, owing to the different consequences flowing from them, not only in the matter of enforcement and appeal but in other respects, as, for instance, the time within which proceedings to annul them must be taken. Rulings on motions are ordinarily orders rather than judgments. The class of judgments and of decrees formerly called interlocutory is included in the definition given in (modern codes) of the word 'order'. 1 A. C. Freeman, A Treatise of the Law of Judgments 19, at 28 (Edward W. Tuttle ed. , 5th ed. 1925 ). Rulings on motions are ordinarily orders rather than judgments. The class of judgments and of decrees formerly called interlocutory is included in the definition given in (modern codes) of the word 'order'. 1 A. C. Freeman, A Treatise of the Law of Judgments 19, at 28 (Edward W. Tuttle ed. , 5th ed. 1925 ). " ( 17 ) SIMILARLY the Oxford Advanced learner's Dictionary defines the term 'award' as under : "award - 2 (c) an increase in the amount of money sb earns; an annual pay award 3 (C, U) the amount of money that a Court decides should be given to sb who has won a case; the decision to give this money: an award of600000 lible damages 4 (U) the official decision to give sth (such as a DIPLOMA) to sb Satisfactory completion of the course will lead to the award of the Diploma of Social Work 5 (C) (Bre) money that students get to help pay for living costs while they study or do research. verb (sb) sth (-sth (to sb) to make an official decision to give sth to sb as a payment, prize, etc. " ( 18 ) THE same Oxford Advanced Learner's dictionary defines the term 'order' as under: "money 8 (C) a formal written instruction for sb to be paid money or to do sth - see also BANKER's ORDER, COURT ORDER, MONEY ORDER, POSTAL ORDER, standing ORDER. " give INSTRUCTIONS 1 to use your position of authority to tell sb to do sth or say that sth must happen : (VN to inf ). The company was ordered to pay compensation to its former employees. The officer ordered them to fire. (VN) They were ordered out of the class for fighting. The government has ordered an investigation into the accident. " ( 19 ) THE Oxford English Dictionary, Second Edition, Vol. X defines the word 'order' as under: "23. a. An authoritative directions, injunction, mandate; a command, oral or written; an instruction. Cf. Under starter's order s. v. STARTER. Esp. in phr. under orders. " "24. spc A. Law. A decision of a Court or judge, made or entered in writing; in the Supreme Court, a direction of the Court or a judge other than a final judgment. ( 20 ) THE same Oxford English Dictionary, second Edition, Vol. VII defines the word 'interim' in the following manner : "2. in phr. under orders. " "24. spc A. Law. A decision of a Court or judge, made or entered in writing; in the Supreme Court, a direction of the Court or a judge other than a final judgment. ( 20 ) THE same Oxford English Dictionary, second Edition, Vol. VII defines the word 'interim' in the following manner : "2. Something done in interval; an interlude. By interims; at intervals Obs. " "3. a. A temporary or provisional arrangement, adopted in the meanwhile. " ( 21 ) THE Stroud's Judicial Dictionary, Fifth edition defines the term 'order' in the following manner : "order. (1) An order (as contrasted with a judgment or final judgment) is a judicial or ministerial direction or conclusion on matters outside the record; "a 'judgment' is a decision obtained in an action, and every other decision is an 'order'" (per Esher M. R. Onslow v. Inland Revenue Commissioner, q. B. D. 556, infra ). Cp. OPINION. (2) An opinion by the Queen's Bench division (under Quarter Sessions Act, 1849 (c. 45), S. 11), on a case stated from Quarter sessions, though not a "judgment," was an "order" within Judicature Act 1873 (c. 66), s. 19, and it was interlocutory". ( 22 ) FROM the closer scrutiny and reading of these judgments and dictionary meanings and in the light of provisions of Arbitration and Conciliation Act, 1966, this Court is of the clear opinion that the order dated 11-3-2007 passed by learned Arbitrator is nothing but an interim order and the same cannot be said to be interim award and, therefore, the appeal filed before the learned Court below under Section 37 of the Act of 1996 could not have been dismissed by the learned Court below as not maintainable. The term 'award' which includes the interim award, has to grant some relief to the claimant by way of interim relief based on tentative determination of rights of the parties and tentative decision about the arbitral dispute in hand before the learned Arbitrator. The impugned order dated 11-3-2007 of learned Arbitrator does not fit in the definition of 'award' either as per various Dictionary meanings reproduced above nor in the light of case laws cited at the Bar and on the contrary, the same clearly falls within the ambit and scope of term 'interim order' as per authorities above. The impugned order dated 11-3-2007 of learned Arbitrator does not fit in the definition of 'award' either as per various Dictionary meanings reproduced above nor in the light of case laws cited at the Bar and on the contrary, the same clearly falls within the ambit and scope of term 'interim order' as per authorities above. The said order also meets the requirements of Section 17 of the Act but does not fall within the parameters of 'award' as defined in Section 31 of the Act. ( 23 ) FROM the proceedings of the present case, it appears that the very initiation of the arbitration proceedings was challenged by the present petitioner by even moving an application under Section 12 of the Act and, therefore, he never voluntarily participated in the arbitration proceedings. The learned counsel for the petitioner even urged that trial court itself was seized of the application under Section 8 of the Act to refer the matter to Arbitrator,then what was the occasion for defendant Jaya Vyas to herself suo motu appoint the said Arbitrator arid cast doubt on the subsequent order sheets of the learned arbitrator after 11-7-2004 up to which date his signatures appear on the order sheet of the learned arbitrator's proceedings and the learned counsel for the petitioner also submitted that in Para 3 of the writ petition, it has been categorically stated by the petitioner that on 11-7-2004 the respondent No. 3, the learned Arbitrator asked him to put his signatures at about 3 or 4 places with the assurance that if he does so, the matter would be settled finally and he would not be required to vacate the shop premises and on that assurance, the petitioner agreed to sign and after that no information whatsoever was ever received by the petitioner from the respondent No. 3, the Arbitrator and, therefore, the respondent Mohan Das remained under the impression that the matter has been finally decided before the Arbitrator. However, to his utmost surprise on 13-3-2007, the petitioner received the order dated 11-3-2007 in question by a registered post. However, to his utmost surprise on 13-3-2007, the petitioner received the order dated 11-3-2007 in question by a registered post. ( 24 ) BE that as it may, this Court is not required to go into the question of validity of arbitral proceedings at this stage and the only question which is required to be decided is as to whether the said order dated 11-3-2007 amounted to an 'interim order' subject to appeal before the Court below under Section 37 of the Act or it is an 'interim award' which is not appealable as such but a challenge can be laid only on the limited grounds under Section 34 of the Act. At the same time, this Court is of the opinion that trial Court below ought to have decided application under Section 8 of the Act itself expeditiously, which may now be decided. ( 25 ) FROM what has been discussed above, this Court is of the opinion that the order dated 11-3-2007 is an interim order passed by the learned Arbitrator and, therefore, subject to appeal under Section 37 of the Act. ( 26 ) CONSEQUENTLY, this writ petition is allowed and the impugned order passed by the learned Additional District Judge No. 3, jodhpur on 2-6-2007 is set aside and the appeal filed by the present petitioner before the said Court is restored for decision afresh on merits in accordance with law. Petition allowed.