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2012 DIGILAW 382 (JK)

Ab. Jabbar Lone & Ors. v. Showkat Ahmad & Ors.

2012-07-09

MANSOOR AHMAD MIR

body2012
1. The appellants have invoked the jurisdiction of this Court in terms of Section 37 of the Arbitration and Conciliation Act, 1997 (hereinafter 'Act' for short) questioning order dated 21.10.2011 passed by the Principal District Judge, Kupwara, whereby the application laid by the appellants for setting aside the order of reference and the arbitral award was rejected and the award passed by the Arbitrators was maintained. Brief facts of the case. 2. The appellants filed a suit for declaration and permanent injunction in the Court of Sub Judge, Kupwara, titled Abdul Jabbar Lone and others v. Showkat Ahmad Lone and others, against the respondents. Along side the suit, the appellants filed an application for grant of ad interim relief in terms of Order 39 of Code of Civil Procedure (hereinafter 'CPC' for short) and an ex parte status quo order was granted. Respondents 1 & 2 (defendants therein) resisted the same and filed the written arguments, whereupon the Learned Sub Judge vacated the order of status quo and dismissed the interim application by its order dated 01.06.2009. Feeling aggrieved, the appellants filed an appeal before the Court of Principal District Judge, Kupwara. During the pendency of the appeal, learned counsel for the parties expressed their desire to settle the matter amicably and, accordingly, sought adjournment, which was granted vide order dated 22.06.2009. On 25th June, 2009, the parties expressed their consent to settle the matter through arbitration and also named two Advocates, namely, M/s G. M. Bhat and Tariq Ahmad Lone as Arbitrators. The statement of the parties and their appearing counsel was recorded and was made part of the record. Accordingly, the Court appointed the said two Advocates as Arbitrators and their fee was fixed at Rs. 4000/- and the parties were directed to file their claims and counter claims before the Arbitrators 3. The Arbitrators entered upon the reference, recorded the statements of the parties and made the award. The award was submitted by them before the Court of Principal District Judge, Kupwara on 22.07.2010. It would be apt to mention here that the matter was pending consideration before the Arbitrators from 25.06.2009 to 22.07.2010, and, during this period, the parties appeared before the Arbitrators and filed their respective claims and cross claims. After examining the entire matter, the Arbitrators made the award on three issues. 4. It would be apt to mention here that the matter was pending consideration before the Arbitrators from 25.06.2009 to 22.07.2010, and, during this period, the parties appeared before the Arbitrators and filed their respective claims and cross claims. After examining the entire matter, the Arbitrators made the award on three issues. 4. After the award was made and submitted by the Arbitrators before the learned District Judge, Kupwara, the appellants made an application for setting aside both the order of reference as well as was arbitration award in terms of Section 34 of the Act. The said application was dismissed by the learned District Judge, Kupwara, vide order dated 21.10.2011. The appellants have questioned the said order by filing the appeal in hand. 5. Heard learned counsel for the parties at length and perused the record. It appears that in terms of Section 89 of CPC, the first appellate Court, on the asking of the parties and after recording their statements as also of their respective counsel, referred the matter to the Arbitrators nominated by the parties themselves. The order was passed purely on the consent of the parties and not on the asking of the Court. Parties themselves chose and nominated the names of the Arbitrators. The Court, accordingly, appointed the Arbitrators, as per the choice and consent of the parties. Not only this, the parties filed their respective claims and counter claims before the Arbitrators. The proceedings before the Arbitrators continued for more than one year during which period extensions too were granted by the Court for making the award. During all this time, the appellants did not raise even their little finger against the order of reference, the proceedings before the Arbitrators or anything connected therewith. It is also worthwhile to mention here that the proceedings conducted by the Arbitrators have also been made part of the award and submitted by the Arbitrators to the Court. 6. It would be appropriate to reproduce Section 34 of the Act, which is extracted hereunder: 34. 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). 6. It would be appropriate to reproduce Section 34 of the Act, which is extracted hereunder: 34. 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 decision 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 the State. Explanation :- Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared for the avoidance of any doubt that an award is in conflict with the public policy of the State if the making of the award was induced or affected by fraud or corruption or was in violation of section 58 or section 64. Explanation :- Without prejudice to the generality of sub-clause (ii) of clause (b), it is hereby declared for the avoidance of any doubt that an award is in conflict with the public policy of the State if the making of the award was induced or affected by fraud or corruption or was in violation of section 58 or section 64. (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), the 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." 7. The question that arises for consideration in this case is: whether the appellants have projected any ground which falls within the mandate of Section 34 of the Act? 8. It is seen that the appellants have averred that the Arbitrators have decided the suit as well as the appeal, which, according to them, was not the subject matter of reference made to them and that the Arbitrators have not submitted the award within the time frame. It is submitted that the appellants had never agreed to refer the matter to the Arbitrators, nor are they signatory to any Arbitration Agreement. 9. What I gather is that the appellants did not question the order of reference dated 25.06.2009 passed at their instance till the passing of the award by the Arbitrators. It is reiterated that the order records the desire of the parties expressed by them before the first appellate Court to have a settlement of the matter of dispute in question through arbitrators and the two arbitrators were named by them. It is reiterated that the order records the desire of the parties expressed by them before the first appellate Court to have a settlement of the matter of dispute in question through arbitrators and the two arbitrators were named by them. In support thereof, their respective statements as well as of their counsel were recorded. Thus the order was passed by the Court on the basis of consensus reached by and between the parties and their counsel. The consent order, which thus came to be passed on 25.06.2009, is an order in terms of Section 89 CPC. Where the parties consent to reference of a dispute to arbitrators, in terms of Section 89 CPC, such consent would suffice even in absence of an Arbitration Agreement between them. 10. It needs to be noted here that the appellants accepted the order dated 25.06.2009. appeared before the Arbitrators, filed their claims and, after noticing that the award was made against them, made a u-turn. The grounds urged by them now are not available to them at all. 11. In my aforesaid view, I am fortified by the judgement of the apex Court in a case A fcons Infrastructure Limited v. Cherian Varkey Construction Company Private Limited, reported in (2010) 8 SCC 24 , has held that a dispute can be referred to Arbitrator in terms of Section 89 of CPC and the Arbitration Agreement is not precondition. It is apt to reproduce paragraphs 34 & 44(1) of the judgement, which reads as under: "34. If there is no agreement between the parties for reference to arbitration, the court cannot refer the matter to arbitration under Section 89 of the Code. This is evident from the provisions of the AC Act. A court has no power, authority or jurisdiction to refer unwilling parties to arbitration, if there is no arbitration agreement. This Court has consistently held that though Section 89 of the Code mandates reference to ADR processes, reference to arbitration under Section 89 of the Code could only be with the consent of both sides and not otherwise." "44. The court should also bear in mind the following consequential aspects, while giving effect to Section 89 of the Code: (i) If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing further need be stated in the order-sheet. " 12. The court should also bear in mind the following consequential aspects, while giving effect to Section 89 of the Code: (i) If the reference is to arbitration or conciliation, the court has to record that the reference is by mutual consent. Nothing further need be stated in the order-sheet. " 12. The same ratio was laid by the apex Court in case Jagdish Chander v. Ramesh Chander, reported in (2007) 5 SCC 719 , and in case Salem Advocates Bar Association v. Union of India, reported in (2005) 6 SCC 344 . 13. Considering the aforesaid principles of law and the background facts, the Principal District Judge, Kupwara, has rightly held that the grounds taken by the appellants for setting aside the Arbitration Award are misconceived and not supported by the award which is supported by the entire record of proceedings recorded by Arbitrators. 14. What emerges from all that mention and discussed above is that in terms of Section 34 of the Act, the grounds of challenge taken by the appellants do not fall within the four corners of the said provision of law. The appeal in hand is a sta tutory appeal and the appellants have to carve out a case as would fall within the mandate of the Act, especially Section 34 thereof, which they have failed to do. Virtually, the appellants have questioned the consent order passed by the Principal District Judge, Kupwara, which reveals that the same was passed at their behest and they not only accepted the same, but acted on it and participated in the entire proceedings as discussed hereinabove. 15. I, therefore, find that the appeal in hand lacks merit and the same is, accordingly, dismissed along with CMP. Interim direction shall stand vacated. Registry is directed to remit the record forthwith.